ASIC is continuing to investigate matters identified in its review of add-on insurance sold through car dealers. Background.
ASIC has announced that Virginia Surety Company, Inc. (Virginia Surety), a general insurer which sells consumer credit insurance in Australia through The Warranty Group Australasia Pty Ltd., will refund over $330,000 in insurance premiums to more than 500 customers. It will also have a condition imposed on its Australian financial services licence, for improperly selling consumer credit insurance policies.
Between 18 June 2013 and 31 December 2015, Virginia Surety sold consumer credit insurance (a bundled add-on insurance product which includes general and life insurance cover), to customers taking out loans at car yards mainly in Queensland and New South Wales.
ASIC found that Virginia Surety had stated that the life cover in the add-on insurance policies was underwritten by TAL Life Limited (TAL), without TAL’s permission.
ASIC has placed a condition on Virginia Surety’s Australian financial services licence which requires it to:
•Refund the life premium paid by affected customers plus interest
•Engage an independent external compliance expert approved by ASIC, to review its compliance practices and report to ASIC
Where a consumer has a valid claim under an affected add-on insurance policy, TAL has agreed to honour the life cover and pay the claim, even though the customer will receive a refund from Virginia Surety.
